First Quantum Minerals Ltd.
LSE : FQM
TSX : FM

First Quantum Minerals Ltd.

August 28, 2009 10:15 ET

First Quantum Minerals Provides Update on the Kolwezi Mining Contract Revisitation

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 28, 2009) - First Quantum Minerals Ltd. ("First Quantum" or the "Company") (TSX:FM)(LSE:FQM) today provided an update on the Kolwezi Project mining contract revisitation. The Kolwezi Project exploitation permit is held under the terms of a Contract of Association, by Kingamyambo Musonoi Tailings SARL ("KMT"), which is owned by the Company: 65%; La Generale Des Carrieres et Des Mines ("Gecamines"): 12.5%; Industrial Development Corporation of South Africa ("IDC"): 10%; the International Finance Corporation ("IFC"): 7.5%; and the Government of the Republique Democratique du Congo ("RDC"): 5%.

The Company recently received a letter from Prime Minister Muzito reporting on the outcome of an August 4, 2009 meeting of the RDC Council of Ministers with respect to the KMT Project and the RDC mining contract revisitation.

This letter purports to try to establish the basis on which the Kolwezi contact can be revoked or cancelled. It is the Company's understanding that the Prime Minister's letter essentially proposes that KMT return the exploitation permit, pertaining to the Kolwezi Project, to Gecamines.

Each of the claims noted in the letter (or slight variations of them) have previously been discussed and refuted with other officials representing the RDC Government during extensive discussions and the Revisitation of Mining Contracts that preceded the receipt of this letter.

Accordingly, the Company and the Kolwezi Project's other contributing partners, the IFC and the IDC, are firmly of the view that these claims have no legal basis. The partners are in the process of preparing a formal response to the letter and will seek further meetings with RDC Government officials.

While the Company has rights to International Arbitration pursuant to the Contract of Association, it will continue to seek a solution to the claims, which have resulted from the mining contract revisitation process, and will provide further updates as warranted.

The following is an English translation, provided by lawyers acting on behalf of the Company, of the relevant paragraphs extracted from the Prime Minister's letter:

"On the basis of the elements that resulted from the renegotiations, in particular on the matters mentioned below, the Council of Ministers has acknowledged and taken note of the impossibility to pursue this partnership, and of the subsequent and unconditional obligation to "retrocede" the title concerning the Tailings Exploitation Permit No. 652 to Gecamines, in accordance with the provisions of article 4.2(b) of the contract of association signed on 23 March, 2004.

The matters are the following:

- the absence of proof regarding the regularisation of KMT Sarl's creation acts in accordance with the Congolese positive law.

The decree No. 04/020 of 15 March, 2004 bearing authorisation of KMT Sarl's creation precedes the notarised articles of association of KMT Sarl, which contradicts article 1 point 1 of the Royal Arrete of 22 June, 1926 on limited liability companies (SARL);

- the non-respect of the project's execution "chronogram": the commercial production's start was scheduled within a 44-month term from the transfer of permit 652, being from May 2004 to February 2008, in accordance with the contract of association. According to article 4 of the contract relating to "Completion and sanction schedule", KMT shall retrocede "unconditionally" to Gecamines the tailings exploitation permit due to the non-respect of the agreed calendar, as today, i.e. more than 60 months later, the company has still not started the production;

- the non-respect of the terms of the initial tender offer under which an upfront payment of USD 130 million in favour of Gecamines was foreseen, with an apportionment of the share capital of 40% for Gecamines and 60% for CMD;

- the refusal to pay to Gecamines royalties of 2.5% of the gross turnover or their equivalent;

- the refusal to cancel the management fees of 1.5% of the sales to be paid to the partner by Gecamines, as contemplated in article 14 of the contract."

The original French text follows:

To view the original French extract please click on the following link: http://media3.marketwire.com/docs/FMFR.gif

On Behalf of the Board of Directors of First Quantum Minerals Ltd.

G. Clive Newall President

12g3-2b-82-4461

Listed in Standard and Poor's

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Contact Information

  • First Quantum Minerals Ltd. - North American Contact
    Sharon Loung
    (647) 346-3934 or Toll Free: 1 (888) 688-6577
    (604) 688-3818 (FAX)
    sharon.loung@fqml.com
    or
    First Quantum Minerals Ltd. - United Kingdom Contact
    Clive Newall
    President
    +44 140 327 3484
    +44 140 327 3494 (FAX)
    clive.newall@fqml.com
    www.first-quantum.com
    or
    Hogarth Partnership Ltd.
    Simon Hockridge
    +44 (0) 20 7357 9477